History of Bankruptcy

Bankruptcy laws were first created to protect the creditor and punish the debtor. Legislation was written in favor of the creditor and carried very stiff penalties for those individuals who could not pay. Fortunately, the focus of these laws has shifted from the creditor to the debtor.

At Ledford, Wu & Borges, LLC, our Illinois bankruptcy lawyers have vast experience guiding clients through challenging economic times. By carefully evaluating an individual's unique financial situation, we can provide detailed advice on how to move toward a fresh start and a stable future. Often, though, clients are concerned about the negative stigma attached to filing for bankruptcy.

It used to be much, much worse.

A Brief History of Bankruptcy

People are fond of saying that as long as there's been money, there's been debt. This is certainly true. A long time ago, rules were set forth to protect the seller of goods. If a consumer could not pay for the goods he or she purchased, that consumer would be punished to the full extent of the law. Ancient Romans and Greeks favored the execution or forced slavery of debtors. Fortunately, these laws did not make it past medieval times.

In the mid-1500s, bankruptcy proceedings were still initiated by the creditor to protect their assets and to get some measure of punishment for the nonpaying debtor. Fortunately, execution and slavery were no longer accepted forms of punishment, but these new laws saw the formation of debtors' prisons.

Debtors' prisons were just that, a prison where a bankrupt individual was sent after a bankruptcy judgment. These prisons quickly filled to capacity and did nothing to help those who had no money.

Finally, in the 1800s, the United States shifted the focus of bankruptcy laws from protecting the creditor to protecting the debtor. Here, the notion of "debt relief" was born, and it was even drafted into the United States Constitution. Now, individuals facing financial peril could protect themselves from a life of abject poverty.

Congress created the modern Bankruptcy Code in 1978 and has made numerous tweaks and changes to ensure Americans have the most protections possible, and have every chance to make a fresh start.

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Contact any of our Chicago offices. Call 312-574-3327 or contact our offices by e-mail to discuss your options during a free consultation with an attorney.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.